Stocks rise after two days of heavy selling

NEW YORK -- Buyers returned to Wall Street Friday after two days of heavy losses, mindful of the economy's growing problems but attracted by stocks' lower prices.

Analysts said the advance, which also came after relief that a bad report on unemployment wasn't worse and followed dour third-quarter reports from Ford and General Motors, was to be expected as Wall Street experiences a rocky recovery from October's devastating selling.

The major indexes jumped more than 2%, including the Dow Jones industrial average, which rose 250 points in light trading. For the week, the Dow and broader benchmarks like the Standard & Poor's 500 index lost about 4% after surging 10% or more last week.

The market briefly came off its highest levels of the session after President-elect Barack Obama reiterated that there is a great deal of hard work to be done to restore the economy to health. Investors had optimistically sent prices higher, only to temporarily pull back when Obama underscored what they already know: that the economy's problems won't be easily solved.

George Shipp, chief investment officer at Scott & Stringfellow in Richmond, Va., said Obama appeared to be trying to telegraph to the market not to expect too much immediately. Obama, noting that he has until January before taking office, said he will work to support an economic stimulus plan and will seek ideas for helping the auto industry.

"My expectation is that he lowers the bar and buys the time," Shipp said. "Certainly there is no reason to create any undue expectations right now."

That afternoon blip upward, retreat and move higher was a mini-version of the market's performance over the past two weeks, with investors turning upbeat, then realizing there was little basis in reality for their resurgent confidence, then changing their minds again.

Hank Smith, chief investment officer at Haverford Investments said the market's turns aren't a surprise.

"I think it's absolutely part of the bottoming process," Smith said. "The Oct. 10 low has been tested again a number of times." The blue chips hit an intraday low of 7,882.51 on Oct. 10.